The Federal Government of Nigeria proposed a new 2020 financial budget of 10.27 trillion Naira. About 320 billion dollars less of what was previously proposed at 10.59 billion Naira.
The new bill has been passed and approved by the National Assembly. The reason behind the reduction in the financial budget is the massive fall in the price of crude oil. At the beginning of 2020, crude oil was sold at $57 per barrel, then rapidly declined to $30 per barrel then to $20 per barrel.
Due to the lack of demand as a result of the COVID 19 pandemic that has taken the world by storm in addition to the unstable price of crude oil from the oil price war between Saudi Arabia and Russia, the fall in crude oil has affected the local economy phenomenally.
Nigeria’s economy is heavily dependent on crude oil and the slightest change in the crude oil market and has a massive impact on the country’s economy. Nigeria reduced its expected revenue from 8.41 trillion naira 5.08 trillion Naira, almost 39% less of the initial budget.
Due to the reduced budget capital expenditure was reduced from 2.7 8 trillion Naira to 2.62 trillion naira. Recurrent expenditure was reduced from 4.5 billion naira to 4.46 billion naira, the sum of 29 billion naira being cut. Statutory transfer was reduced from 560.47 billion naira to 407.8 billion naira.
